A Quiet Data Week, Not So Quiet for Earnings

Investors will turn their attention towards the latest out of earnings as we have a quiet data week. On the economic front, we have Empire State Manufacturing, Building Permits and Housing Starts.

Earnings: After our first bout of earnings with the banks last Friday, earnings heat up as investors get to hear from 70 S&P 500 companies and 9 Dow components this week. Traders will continue to see individual stocks have huge price swings if a company’s earnings outpaces or fall short of what the street expected. According to Thomson Reuters I/B/E/S, only 6% of S&P 500 companies have reported 2nd quarter earnings so far. Of them, 83% reported revenue above expectations while 80% have reported earnings above expectations.

ECB Interest Rate Statement: On Thursday (7/20), the ECB releases their interest rate statement, followed by a press conference from Super Mario Draghi. Investors will be listening for any changes to the ECB’s asset purchase program. Should they decide to taper the program, we would see the Euro strengthen, and send European markets (and the US) lower.

Bank of Japan: Also on Thursday (7/20), we are expecting a policy statement from the Bank of Japan. Investors are not expecting any massive monetary policy shift. However, any unexpected monetary stimulus announcement or tightening by the bank has the potential to push markets in one direction or the other. A tightening would send stocks down with the Japanese Yen strengthening while monetary stimulus would send the Yen lower. Their policy outlook could potentially depend on how many tourists are riding the streets of Tokyo as Mario Kart.

Chinese Data: This week, China will be releasing 2nd quarter GDP and Industrial Production. Since the 3Q 2015, Chinese GDP has hovered between 6.7% and 6.9%. Investors will monitor the latest release and if it comes in weaker than expected, (how much of that # is fake is a little tough to determine) we could see oil fall on weaker demand.

No Fed Speakers this week. The Federal Reserve entered into their media blackout period over the weekend. So this week, we won’t have any sound bites of FOMC members contradicting themselves confusing algos and the markets as to the timing of interest rate normalization and balance sheet reduction. The next Federal Reserve meeting is next week which has the potential to move markets.